Microsoft's Revenue gets a Boost as Remote Workers use its Cloud Services

On April 29, 2020, Microsoft Corp reported quarterly revenue above Wall Street estimates, boosted by higher demand for its cloud platform Azure and collaboration app Teams, and as people locked in their homes due to the coronavirus pandemic played more games on Xbox consoles.

Microsoft said revenue for its “commercial cloud,” a combination of Azure and the cloud-based versions of software such as Office, rose 39% to $13.3 billion. The business’ gross profit margin, a key measure of cloud profitability that Microsoft has told investors it expects to improve, was 67% versus 63% last year.

Microsoft also said the capital expenditure was $3.9 billion, up from $3.4 billion a year earlier and less than the $4.5 billion the previous quarter. However, Microsoft Chief Financial Officer Amy Hood told Reuters that supply chain constraints due to the coronavirus pandemic had delayed some spending to build Azure data centers, which will likely be higher next quarter as the company works to catch up.

Revenue in the Intelligent Cloud segment, which includes Azure, rose 27% to $12.28 billion, beating analysts’ consensus estimate of $11.87 billion according to IBES data from Refinitiv.

Revenue rose 15% to $35.02 billion in the third quarter ending March 31, beating estimates of $33.66 billion. Net income rose to $10.75 billion, or $1.40 per share, from $8.81 billion, or $1.14 per share, a year earlier.